Singapore investor divests from top Vietnamese taxi firm

By Minh Son   June 4, 2018 | 08:19 pm PT
Singapore investor divests from top Vietnamese taxi firm
Singapore sovereign wealth fund GIC has sold all of its 8 percent stake in taxi firm Vinasun. Photo acquired by VnExpress
Divestment at big loss indicates tougher times ahead for traditional taxi firms in the age of ride-hailing services.

Singapore sovereign wealth fund GIC has made a full exit from its investment in Vietnamese taxi firm Vinasun, incurring a major financial loss in the process.

On May 25, GIC negotiated the sale of 5.4 million shares or around 8 percent of its stake in Vinasun at around VND80 billion (US$3.5 million), less than half the price it paid four years ago.

In August 2014, GIC forked out VND200 billion ($8.8 million) or VND45,000 ($1.98) apiece for its stake in Vinasun, which means it has suffered a loss of around VND120 billion ($5.27 million) from this investment.

The divestment comes as the taxi company performs poorly and its share value plunges. The company has blamed its problems on “unfair competition” from foreign ride-hailing service companies.

“Foreign companies tapping into HCMC taxi market with 30,000 cars, and taking advantage of their financial resources and legal loopholes to create unfair competition aimed at driving out local competitors has directly affected our business operations,” said Dang Thi Phuong Lan, Vinasun general director.

Ride-hailing services Grab and Uber arrived in Vietnam in 2014, launching both car and motorbike taxi services. The two services have been running on a trial basis since early 2016, cutting deep into the earnings of traditional taxi drivers.

Many taxi firms have accused Grab and Uber of unfair competition, saying their businesses have suffered and thousands of drivers have had to quit.

Vinasun earned VND4.25 trillion ($187 million) in revenue and VND205 billion in net profits in 2017, down 10 and 34 percent respectively compared to 2016.

Last February, it sued Malaysia-based firm Grab, citing “unhealthy competition” and sought $1.84 million in compensation, calculated by the profit loss it says it suffered in 2016 and 2017.

But the trial was suspended after the court asked to see more evidence of Grab’s alleged violations.

In April, Uber sold its Southeast Asian business to bigger regional rival Grab and exited Vietnamese market. The deal has sparked fears that Grab uses its monopolistic advantage to curb competition, resulting in higher fares and fewer incentives for both passengers and drivers.

Vinasun has targeted revenues of VND2.16 trillion ($94.9 million) and after-tax profits of VND95 billion ($4.18 million), this year, 50 percent less than in 2017 and the lowest target in nine years.

GIC is one of the biggest financial investors in the Vietnamese market. It has injected some VND15 trillion ($658.8 million) into the country’s major companies, including Masan Group, Vietjet Air, Vinamilk, FPT, PAN Group and Vinasun.

In April, it invested $1.3 billion in Vietnamese real estate giant Vinhomes.

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